Supplemental Materials for Financial
Results of the First Quarter of
the Fiscal Year Ending January 2024
Computer Engineering & Consulting Ltd.
June 9, 2023
© Computer Engineering & Consulting Ltd. All rights reserved.

Contents

1.

Operating Results for the First Quarter of the Fiscal
Year Ending January 2024

2.

Earnings Forecasts for the First Half and Full Year of
the Fiscal Year Ending January 2024

3.

© Computer Engineering & Consulting Ltd. All rights reserved.

Appendix1

Contents

1.

Operating Results for the First Quarter of the Fiscal
Year Ending January 2024

2.

Earnings Forecasts for the First Half and Full Year of
the Fiscal Year Ending January 2024

3.

© Computer Engineering & Consulting Ltd. All rights reserved.

Appendix2

Year-on-year comparison of 1Q results◼ Net sales and income increased as system development projects continued to be favorable in line with the strong
demand for DX from major customers.
◼ Profits hit record highs in the first quarter.
(Unit: Million yen)

FY2023/1Q

FY2024/1Q

Change from the same period of
the previous fiscal year
Amount of change

Net sales
Operating income

Operating income ratio
Ordinary income
Ordinary income ratio

Net income
Net income ratio© Computer Engineering & Consulting Ltd. All rights reserved.

Rate of change

11,801

13,222

1,421

12.0%

900

1,842

942

104.6%

7.6%

13.9%

6.3 pt

－

907

1,853

945

104.2%

7.7%

14.0%

6.3 pt

－

837

1,286

449

53.6%

7.1%

9.7%

2.6 pt－3

Financial results
Net sales◼ Net sales (100 million yen)
480

500

359

400
300

482

452

Year-on-yearcomparison

352

335

245

+12.0%

234

224

200

126

132

118

114

0

2Q

3Q

4Q

1Q

2Q

3Q

4Q

FY2022/1

FY2021/1

1Q

2Q

3Q

1Q

4Q

FY2023/1

FY2024/1◼ Operating income/Operating income ratio (100 million yen, %)
100

12.2%
80

Year-on-yearcomparison
10%

60

7.6%

50
37

40

22

15

+104.6%

32

30

26
20

43

42

5%

19

13

18

9

⚫ Nearshore development of group companies also
remained strong.
Operating income

15%

13.9%

12.1%

⚫ Sales increased due to growth in focusedbusiness.
⚫ Sales increased due to growth in the corebusiness.

100

1Q⚫ System development projects continued to befavorable due to stronger demand for ICT
investment.

0⚫ Income increased due to higher net sales.
⚫ Income increased due to growth in focusedbusiness.
⚫ There was a reactionary increase related toallowance for loss on orders received.

0%

1Q

2Q

FY2021/1

3Q

4Q

1Q

2Q

FY2022/1© Computer Engineering & Consulting Ltd. All rights reserved.

3Q

4Q

1Q

2Q

FY2023/1

3Q

4Q

1Q
FY2024/1

4

Year-on-year comparison by business segment◼ In the digital industry business, both net sales and operating income increased thanks to growth in ICT investment
made by customers in the manufacturing industry.
◼ In the service integration business, sales increased due to favorable migration and infrastructure construction
projects. Operating income grew due to a reactionary increase related to the allowance for loss on orders received.
(Unit: Million yen)

FY2023/1Q
Operating income
Rate of return

Net sales

Digital Industry
Business

4,096

Service Integration
Business

7,704

Corporate expenses

－

Total

© Computer Engineering & Consulting Ltd. All rights reserved.

FY2024/1Q

11,801

1,035
25.3%

923
12.0%

(1,058)900
7.6%

Amount of change

Operating income
Rate of return

Net sales

4,642
8,580
－

13,222

Net sales
Rate of change

Operating income
Rate of change

1,171

545

136

25.2%

13.3%

13.2%

1,668

875

744

19.4%

11.4%

80.6%

(997)

－

60

1,842

1,421

942

13.9%

12.0%

104.6%

5

Digital Industry Business◼ Operating income/Operating income ratio (100 million yen, %)◼ Net sales (100 million yen)

70

200
162

168

158

150
122

100

50

84

42

50

20%
38

40
33

82

77

30

46

40

39

31

25

28

21

18

20
10

19

14

9

10%

11

10

8

0

0
1Q

2Q

3Q

4Q

1Q

FY2021/1

2Q

3Q

4Q

FY2022/1

Business category

1Q

2Q

3Q

4Q

FY2023/1

30%

60

123

116

25.2%

0%

1Q

1Q

2Q

FY2024/1

FY2021/1

Net sales
weather chart

3Q

4Q

1Q

2Q

3Q

FY2022/1

4Q

1Q

2Q

FY2023/1

3Q

4Q

1Q
FY2024/1

Point

Smart factory⚫ System development projects accompanied by product introductions increased as demand for DX
at production sites expanded.

Connected services⚫ Automobile-related big data analytics and smartphone application development remained strong.
⚫ Major clients’ core system development increased, and development projects (in design and financeareas) grew.

Chubu services
Nishinihon services
10% or more YoY increase© Computer Engineering & Consulting Ltd. All rights reserved.

⚫ In addition to sales growth in logistics solutions, system development projects remained on a parwith the previous year.
0 to less than 10% increase

0 to less than 10% decrease

10% or more YoY decrease

6Service Integration Business◼ Net sales (100 million yen)

◼ Operating income/Operating income ratio (100 million yen, %)

400

70
317

300

200

19.4%

60

20%

50
50

237

100

313

293

229

218

161

40
152

146

83

45
34

30

85

77

74

20

37

25

34

24

14

10%

20

16

14

9

10
0

45

0
1Q

2Q

3Q

4Q

1Q

FY2021/1

2Q

3Q

4Q

FY2022/1

Business category

1Q

2Q

FY2023/1

3Q

4Q

0%

1Q

1Q

FY2024/1

FY2021/1

2Q

3Q

Net sales
weather chart

4Q

1Q

2Q

3Q

FY2022/1

4Q

1Q

2Q

3Q

4Q

FY2023/1

1Q
FY2024/1

Point

Service integration⚫ Sales remained comparable to the level of the previous fiscal year due to the loss of opportunity totake orders caused by the impact of unprofitable projects, but profit increased as the impact waned.
⚫ Both sales and income were favorable, due to strong growth in migration needs.

Platform architect⚫ Both sales and income grew as demand in the infrastructure construction business increased andsupply recovered.
⚫ Although sales were at normal levels in conjunction with the weakened demand for security
enhancement and updates, orders were on an upward trend.

Group companies⚫ Results were up year on year due to an increase in nearshore development projects for major
customers.
10% or more YoY increase© Computer Engineering & Consulting Ltd. All rights reserved.

0 to less than 10% increase

0 to less than 10% decrease

10% or more YoY decrease7

Progress of focused business◼ Focused business : Progress was made generally asplanned on the whole.

◼ Full-year forecast and sales results for focusedbusiness(100 m i l l ion yen)

Production andlogistics⚫ Number of customers considering DX
promotion in their factories has been on
the rise.
⚫ Customization occurs for each customer,
causing planning to take longer.

Mobility
services⚫ In mobility projects, inqueries about big
data analytics have been on the rise.
⚫ ICT investment in the automotive industry
also remained strong.

DigitalIndustry
Business

Service
Integration
Business

Services incooperation with
Microsoft Japan⚫ Inqueries about Dynamics 365 CRM andPower Platform increased.

Migration
services⚫ Migration needs were strong.
⚫ Business was favorable with many
discussions aimed at cloud computing
and security enhancement.

Security
services⚫ Sales declined due to lower stocking andsales, but orders have been on the rise.

DX cloudplatform⚫ In the phase of constructing operating
infrastructure© Computer Engineering & Consulting Ltd. All rights reserved.

160

142
140

120

100

80

60

40

31

33

20

0
FY2023/1Q(Results)

FY2024/1Q(Results)

FY2024/2Q(Forecast)

FY2024/3Q(Forecast)

FY2024/4Q(Forecast)8Orders received/orders in hand
◼ System development projects increased driven by DX, and both orders received and orders in hand have beenon an upward trend.
◼ In the infrastructure construction business, orders in hand increased due to the acquisition of orders for long-term
projects.
Year-on-yearcomparison

Orders received (million yen)

Year-on-yearcomparison

Orders in hand (million yen)

+3.7%

Digital Industry Business

Digital Industry Business

Service Integration Business

Service Integration Business+22.9%
17,662

52,377
16,76015,65746,221
40,56135,206

14,366

17,153

3,366

3,533

3,340

11,792

16,19812,653

12,10814,3092,892

26,301

12,164
11,486

11,183
3,194
2,817

3,343

3,150

3,021

23,1408,389
7,895

14,68012,79130,02327,907

4,418

23,098

4,167

4,835

8,899

8,366

8,969

8,465

2Q

3Q

4Q

11,022

11,1591Q
FY2023/1

2Q

12,317

14,128

10,39010,2628,623
2Q

13,394

15,226

17,912

15,2451Q
FY2022/1

35,224

3Q

4Q© Computer Engineering & Consulting Ltd. All rights reserved.

1Q
FY2023/1

2Q

3Q

4Q

1Q
FY2024/1

1Q
FY2022/1

3Q

4Q

1Q
FY2024/1

9

Year-on-year comparisons of sales by industry(Unit: Million yen)

Year-on-year comparisons

FY2023/1Q

FY2024/1Q

Points by industry
Amount of change

Manufacturing industry

5,118

5,905

Component ratio(43.4%)(44.7%)

3,074

3,380

Component ratio(26.0%)(25.6%)

Financial industry

1,292

1,303

Component ratio(10.9%)(9.8%)

Distribution industry

633

781

Component ratio(5.4%)(5.9%)

Government and public offices

528

736

Component ratio(4.5%)(5.6%)

Other industries

1,154

1,115

Component ratio(9.8%)(8.4%)

Total

11,801

13,222(100%)(100%)

Communication andinformation service industry© Computer Engineering & Consulting Ltd. All rights reserved.

787

Rate of change

15.4%[Manufacturing industry]
System development projects increased.
Infrastructure construction projects increased.

305

9.9%

11

0.9%

147

23.3%

207

39.2%

[Communication and information
service industry]
Cloud development projects increased.

[Financial industry]
Performance was comparable to that of theprevious year due to the downsizing of projectsof major customers.

[Distribution industry]
Demand for logistics services increased.

(38)(3.4%)[Government and public offices]

1,421

12.0%

Infrastructure construction projects increased.

10Consolidated balance sheet(Unit: Million yen)

FY2023/4Q

FY2024/1Q

Comparison with the end of
the previous year
Amount of change

Rate of change

35,20836,542

1,334

3.8%

Cash and deposits

23,302

25,617

2,315

9.9%

Non-current assets

11,124

11,236

111

1.0%

6,615

6,537

(77)

(1.2%)

258

240

(17)

(6.8%)

4,251

4,458

206

4.9%

46,33347,779

1,445

3.1%

8,311

9,125

814

9.8%

642

639

(3)

(0.5%)

Total liabilities

8,954

9,765

811

9.1%

Total net assets

37,37938,013634

1.7%

Total liabilities and net assets

46,33347,779

1,445

3.1%

Current assets

Property, plant and equipment
Intangible assets
Investments and other assets

Total assets
Current liabilities
Non-current liabilities© Computer Engineering & Consulting Ltd. All rights reserved.

Point[Assets] Increased
Increase in cash and deposits[Liabilities] Increased
Increase in provision for bonuses
Increase in contract liabilities[Net assets] Increased
Increase in retained earnings

Equity ratio

80.5%→79.5%

11

Unprofitable projects and future plans◼ Status of response to unprofitable projects
 Currently operating stably.
 Response is being taken while maintaining the framework for the busy system season.
Will be fully settled in the first half of the year.
◼ Background and future plans
FY2023

FY2024

3Q• Customer acceptance test
• Briefing for users

2Q

1Q

4Q
• Pre-test – General test
• Migration to the production
environment, cutover Problem occurred after cutover• Bug fixes and further improvements• Strengthening the environment andframework• Maintain enhanced environment
and framework• Expecting full convergence during
the first half of the year

◼ Service Integration Business: Impact of unprofitable projects (Reference)
FY2022/1
First nine months

First half

Impact on statement of income
Impact on operating income

Breakdown
Recording of extraordinary loss
© Computer Engineering & Consulting Ltd. All rights reserved.

FY2023/1
Full year

First three months

Full year

(82)

(831)

(1,136)

(496)

(881)

(82)

(435)

(722)

(496)

(881)

－

(396)

(414)

－

－
12

Contents

1.

Operating Results for the First Quarter of the Fiscal
Year Ending January 2024

2.

Earnings Forecasts for the First Half and Full Year of
the Fiscal Year Ending January 2024

3.

© Computer Engineering & Consulting Ltd. All rights reserved.

Appendix13

Earnings Forecasts for the First Half and Full Year of the Fiscal Year Ending January 2024
◼ With demand for ICT investment on the rise against the backdrop of DX promotion, earnings forecast
for the second quarter is revised upward.
◼ Full-year earnings forecast remains unchanged due to lingering concerns about rising prices andstagnant economic conditions overseas.
(Unit: Million yen)
Revised forecast for FY2024
Second quarter

Second quarter(before revision)(after revision)

Amount of change

Rate of change

Full year(no change)

Net sales

24,80025,600800

3.2%

51,000Operating income

2,550

3,000

450

17.6%

5,550

Operating income ratio

10.3%

11.7%

1.4 pt－10.9%

Ordinary income

2,560

3,010

450

17.6%

5,570

Ordinary income ratio

10.3%

11.7%

1.4 pt－10.9%

Net income

1,770

2,070

300

16.9%

3,840

Net income ratio

7.1%

8.1%

1.0 pt－7.5%© Computer Engineering & Consulting Ltd. All rights reserved.

14

Full-year earnings forecasts and points◼ Net sales (100 million yen)

Net sales

600

400

510

482

452

⚫ Full-year forecast remains unchanged.

352

335

200

132

118

114

⚫ Cultivate new business opportunities throughdeep cultivation of major customers by crossselling and up-selling across the Company.

256

234

224

⚫ Promote higher sales of products and services in
the focused business.

0
1Q

2Q

3Q

4Q

1Q

FY2022/1

2Q

3Q

4Q

1Q

FY2023/1

2Q

3Q

4Q

FY2024/1◼ Operating income/Operating income ratio (100 million yen, %)
13.9%

80

12.1%
60

10.9% 12%

9.4%

9.3%
7.6%

40

55
32

30
22

30

19

13
2Q

3Q

4Q

1Q

FY2022/1© Computer Engineering & Consulting Ltd. All rights reserved.

2Q

3Q

FY2023/1

4Q

1Q

2Q

3Q

⚫ Full-year forecast remains unchanged.
⚫ Acquire high-profit business opportunities andpromote service shifts.

4%⚫ Revise product and service menus to reflect rising
electricity cost and commodity prices.

0%⚫ Curb the occurrence of unprofitable projects.

18

9

0

1Q

8%

43

42

20

Operating income

4Q

FY2024/1

15

Full-year earnings forecast by business segment◼ Net sales and operating income forecast
FY2024Service Integration Business

Digital Industry Business33.0 billion yen

18.0 billion yen

Focused business

Focused business

8.5 billion yen

5.7 billion yen

FY2024/1Q

Digital Industry
Business

Focused businessNet sales

Full-year forecast

Progress rate

4.6 billion yen 18.0 billion yen

25.8%

Operatingincome1.1 billion yen

4.0 billion yen

29.3%

Net sales

1.5 billion yen

5.7 billion yen

26.7%

Focusedbusiness

Focusedbusiness

85

57
Digital Industry
Core business

FY2024123

FY2024/1Q

Service Integration
Business

Focused business

Full-year forecast

Progress rate

Net sales

8.5 billion yen 33.0 billion yen

26.0%

Operatingincome1.6 billion yen

5.6 billion yen

29.8%

Net sales

1.8 billion yen

8.5 billion yen

21.4%

Service Integration
Core business

245(FY2024 Sales target by business segment)© Computer Engineering & Consulting Ltd. All rights reserved.

16

Contents

1.

Operating Results for the First Quarter of the Fiscal
Year Ending January 2024

2.

Earnings Forecasts for the First Half and Full Year of
the Fiscal Year Ending January 2024

3.

© Computer Engineering & Consulting Ltd. All rights reserved.

Appendix17

Company profile
Company Name Computer Engineering ＆Consulting Ltd.
Date ofFebruary 24, 1968
establishment
April 2022 (Prime Market)
Date of Listing
July 2001 (First Section of Tokyo Stock Exchange)
Capital6,586 million yen
Net sales
48,206 million yen (FY ended Jan. 2023)
Licenses andapprovals■ Stated in the list of companies providing system auditing
services, the Ministry of Economy, Trade and Industry■ Stated in the list of companies providing information
security auditing services, the Ministry of Economy, Tradeand Industry■ PrivacyMark-certified business operator 11820032(12)■ JQA Certification• Quality Management System
ISO 9001:2015 (Certification No. JQA-1481)• Information Security Management System
ISO/IEC 27001 (Certification No. JQA-IM0007)• Cloud Service Information Security Management System
ISO/IEC 27017 (Certification No. JQA-IC0040)• Information Technology Service Management System
ISO/IEC 20000 (Certification No. JQA-IT0005)• Environmental Management System
ISO 14001:2015 (Certification No. JQA-EM7701)■ Telecommunication engineering business, Minister ofLand, Infrastructure, Transport and Tourism(Ordinary-4) No. 28700(License date: November 21, 2022)

Number of
Employees
Consolidated
subsidiaries
Head Office

Representative

2,290 (as of April 1, 2023)
8 companies
JR Ebisu Bldg., 5-5 Ebisu Minami 1-chome, Shibuya-ku, Tokyo
150-0022
Takashi Himeno, Representative Director & President

Business Description■ Digital Industry Business
Providing original ICT products and services aimed mainly at
supporting the manufacturing industry to improve operational
efficiency, improve quality, and create attractive products.

■ Service Integration BusinessSupporting the entire ICT life cycle, which is necessary to reform
and improve the business operations of companies andorganizations. Providing total ICT services and products, including
cloud computing and security.

<Two businesses contributing to the realization of a sustainable society>

Promoting ESG management and contributing to development of customers’ business through tacklingsocial problems
Needs for ICT that are increasing owing toalteration to a smart factory
Introduction of IoT and expansion of
PoC by customers

AI

Know-how on the whole ICT
infrastructure

Cloud

Big data

IoT

Base to cooperate in in-house DC
and cloudSystems specializing in lines ofbusiness and operations

Technologies for AI, IoT, and sensing
Accumulating know-how on FA
control, robots, and equipment© Computer Engineering & Consulting Ltd. All rights reserved.

Total integrator for ICT

ICT partners specializing in manufacturing industry

Robotics

Security

Defense against evolving menaces
to security

18Medium-Term Management Plan Vision 2025

Vision 2025: To a Company That Creates
the Future with ICT Technologies
1. Strengthening business capabilities
Increasing the areas of focused business to six from two

1. Strengthening business capabilities
Shifting to service-oriented business

2. Strengthening human resources and technical capabilities

Business growth
X
Personnel
assignment

Cultivating human resources

1. Strengthening business capabilities
Changing to an increase in the number of employees

A synergy of business across the whole company

Diversity and work-style reform

3. Strengthening management foundation
Promoting ESG activities

Target management
indices© Computer Engineering & Consulting Ltd. All rights reserved.

1. Strengthening
business
Promotingin-house DXcapabilitiesImproving the financial base and other matters

Net sales

Ordinary income

Ordinary income ratio

ROE/Payout ratio

56.0 billion yen

6.9 billion yen

12% or more

ROE: 12% or more
Payout ratio: 40% or more

19

Segment Information
Digital Industry

Service Integration

ICT partners specializing in manufacturing industry

Total integrator for ICT
Service integration⚫ Consulting, system development, maintenance and operation using⚫ Product planning, product development and system development,

Smart factory

maintenance, and solution services for production and logistics areas in the
manufacturing industry

Enterprise

Microsoft’s cloud services such as Dynamics 365, Microsoft 365 and Azure⚫ Development, maintenance and operation of solution systems forgovernment agencies and municipalities⚫ Consulting, system development, maintenance and operation, and solution

AX services⚫ Consulting, system development, maintenance and operation related to ICT

Business systems⚫ Systems development, maintenance and operation for the financial sector,

modernization using migration services

services related to the IoT-connected field with a focus on mobility

Connected services⚫ Operations related to the development of embedded software, mainly for in-vehicle devices⚫ Operations on quality solutions such as automated testing, CI/CD building

including banking, insurance, credit card, securities and leasing

Platform architect⚫ Monitoring and operation of various security services and security equipment⚫ Overall ICT services for the Technical Information Division (bill of

Chubu services

material/PDM/CAD), Corporate Information Division(sales/finance/accounting), and Corporate Information Division(personnel/production logistics) that target the automotive industry

Security services⚫ Product development and sales, solution services, system development,

maintenance and operation related to office security based on authentication
technology⚫ Operations related to the overall life cycle management from planning and

Platform⚫ Provision of SI services using business SI and EOS solutions in the Kansai

examination of ICT systems and cloud services to design, construction,
migration and operationand Hokuriku areas⚫ Operations related to data center and cloud services⚫ Product planning, development, maintenance, operation and provision of

Nishinihon services

product services, with a focus on the IoT field in the logistics andmanufacturing sectors⚫ Provision of systems development, verification, maintenance, operation andinstallation services, mainly in the FA/industrial equipment and medical &healthcare fields

Data center

operation management services

Group companies
Foresight System, etc.

© Computer Engineering & Consulting Ltd. All rights reserved.

⚫ Operations related to system operation design, implementation support, and⚫ Nearshore development, construction, maintenance and operation⚫ Temporary staffing service

20Focused business（Results for FY ended Jan. 2023）

Total company sales: 48.2 billion yen
Service Integration Business

Digital Industry Business31.3 billion yen

16.8 billion yen

Focused business

Focused business7.6 billion yen

5.1 billion yen

Focusedbusiness

Focused business: Business areas that leverage theirunique features
Production andlogistics

In addition to product services for the
manufacturing industry, LogiPull, a logistics
solution, is added. These are focused areas tosupport digitalization and DX strategy in fields
from production sites to logistics.

Mobility
services

Focused areas for developing services
utilizing automotive/transportation big data,
mainly in the connected field of the automotive
industry

Services incooperation with
Microsoft Japan

Focused areas for promoting businesses incooperation with Microsoft and supporting DX,
mainly through management analysis andmarketing of Dynamics 365/Azure platform

Migration
services

Focused areas to support legacy ICT
innovation, cloud migration and DX of systems
and application environments

Security
services

Focused areas for security consulting, design,
construction, and operation services, with aportfolio of products that protect ICT elements
connected to the network from security threats

DX cloudplatform

Focused areas to promote installation of inhouse products on cloud platforms

DigitalIndustry
Business

Focusedbusiness

Digital Industry
Core business
Service Integration
Core business© Computer Engineering & Consulting Ltd. All rights reserved.

Service
Integration
Business

21

Disclaimer✓ This document has not been prepared for the purpose of soliciting investments.
✓ Forward-looking statements in this document are based on judgments and assumptions made in lightof trends in the Japanese economy and the information services industry, as well as information
available at the time of preparing this document.
Accordingly, there is a possibility that forecasts may fluctuate due to uncertainties inherent in them,changes in domestic and overseas situations relevant to future business operations and otherfactors.
✓ The contents stated in this document may not be reproduced, transcribed, reprinted or distributed
without permission of the Company.
Contact:
Computer Engineering & Consulting Ltd.
Corporate Management Group, Business Promotion Unit,
Corporate Planning Division, Investor Relations
Corporate Management Group, Corporate Administration Unit,
Accounting Division, Investor Relations
E-mail：IR@cec-ltd.co.jp© Computer Engineering & Consulting Ltd. All rights reserved.

TEL：03-5789-2442
TEL：046-252-4111

22